There is a lot of emphasis in business management theory about branding and its impact on how well a company’s products perform in the market. One of the reasons branding is important to marketing is because without a strong brand, it can be difficult for a company to draw in customers and vital employees.
Below you’ll find some of the top reasons why branding is important in marketing. From strengthening a company’s public profile to improving a company’s performance on the stock market, branding affects almost every aspect of its operations.
One of the primary motivations for branding is to help make a company more recognisable by the public. Even people who don’t own Nike sneakers would likely recognise the company’s signature swoosh or tagline “Just Do It”. Many consumers could easily name a dozen or more recognisable companies based on their branding alone.
Brand recognition is dependent on one of several different identifiers (Source: Investopedia):
These different company assets help the consumer recognise the company on the market. This, in turn, encourages customer loyalty and repeat business. Brand recognition in marketing is responsible for customer recall. If a company’s branding isn’t memorable enough for them to stand out in the public eye, that company will ultimately struggle to sustain a customer base.
Company marketing pours attention and detail into their branding strategies because branding is an aspect of a company that makes them more trustworthy to the customer. In marketing, the customer is more likely to gravitate towards a brand or company they’ve used before and experienced.
Branding isn’t just a way for customers to recognise a company more quickly—it has a direct impact on how often they purchase products from that company. Studies show that 71% of consumers are more likely to buy a product from a company they recognise. (Source: Global Banking and Finance Review)
This holds true even if the recognised brand product is objectively inferior in quality to an unbranded product. That just goes to prove the power of a strong brand when it comes to company marketing.
Read more about: Brand Strategy
Along with making customers more likely to patronise a company, branding also increases a company’s value on the stock market. The value of a company’s stock is not just dependent on the shareholder’s equity but also on the strength of the company’s branding and the value of the brand asset it owns.
Strong brand value equals more substantial returns on the stock market. Brand recognition allows big brand companies to outsell their competitors on a volume basis, making their stocks a stable investment. Investors prefer these stocks as they incur the least amount of risk in their investments. (Source: Science Direct)
So how does branding ultimately affect corporate value?
No matter how strong a product is on an objective level, without strong branding to make that product stand out on the market, the product’s corporate value will remain comparatively low next to brands with consumer recognition on their side.
There are many studies on the positive impact that strong branding can have on a company’s marketing, but branding is also essential for the employees who work there. Increasingly, employees are striving to work for companies that put ethics at the forefront of their business management practices.
Here are some of the ways that branding affects employee engagement with their company:
When it comes to having a strong marketing campaign, it’s not enough for a company to just have a strong brand. They also have to bring in the kind of people who can continue to build that brand up into a massive success.
Branding impacts marketing by increasing a company’s word of mouth, the method of marketing where customers recommend a company or product to others. Word of mouth is much more likely to come from customers who have developed an emotional connection with a product they buy or use. This emotional connection is much easier to establish through compelling brand marketing.
Marketing has a similar effect on branding as referral does, except that word of mouth is where the customer freely recommends a product to others. This boils down to free advertising for a brand as long as the word of mouth being passed is positive.
Word of mouth can be driven by the following marketing aspects as well as branding:
The downside to branding’s impact on word of mouth is that it can also have a negative word of mouth effect if a brand becomes associated with a scandal or an inferior product. Word of mouth can drive a product or company boycott, just as quickly as it can create an uptick in sales revenue. This is why companies must protect their brand with ethical public behaviour.
While a company’s branding involves many different aspects of how a company presents itself and how it markets its products, many aspects of a company’s branding involve distilling the ideas behind that company down to a strong visual or auditory cue.
Whether it’s an instantly-recognisable logo or a song that makes customers think of a company in seconds, branding is how customers think of a company outside of the products it creates. By breaking down a company’s identity into an easy-to-grasp symbol, companies make it easier for customers to remember the company for repeat business.
When it comes to marketing, branding isn’t just a way to make products more recognisable on the market. It’s also a way for companies to tell stories in the public that work as identifiers for themselves. This can be accomplished by marketing actions such as a company donating profits to charity publicly or releasing a viral social media post.
These marketing actions don’t just tell stories to customers about the products that a company sells. They tell stories to customers about the values a company represents. These emotional appeals are much better at establishing brand loyalty than product quality alone.
From a product’s conception to a company’s overall profile, branding touches on how a company operates at practically every level. Branding isn’t just a way for customers to quickly identify a company in a market jammed full of competitors—it’s also a way for companies to stand out and claim a corporate identity that illustrates their ethics and goals as a business.
